Summary
The recent move by LCH Clearnet to slash its fees is a direct result of the recent moves by the European based MTF's to gain access to liquidity pools within the established clearers in Europe. As a condition of gaining access to such liquidity pools, and as an incentive to move volumes away from emerging clearers such as EMCF (European Multilateral Clearing facility), clearers such as LCH Clearnet are bowing to pressure by reducing their clearing fees significantly. In exchange. the clearers are forcing interoperability on the market which will shift some of the MTF flows away from the emerging clearers to the established clearers.
Analysis
The competitive nature of clearing in Europe is finally coming of age, the battleground will go away from the equity feeds to the control of the ultimate client as clearing houses become interoperable across markets in Europe, allowing cross margining between different marketplaces at one clearing entity.
